Company Accounts

Share Capital

Medium

common

After forfeiture of share, the amount transferred to capital reserve is

Profit on forfeiture plus loss on reissue of forfeited share.

Amount of securities premium debited on forfeiture.

Profit on forfeiture minus loss on reissue of forfeited share,

Balance of amount not yet called.

✅ Correct Option: 3

When shares are forfeited, the amount already received from the shareholder is credited to Share Forfeiture Account. This represents the profit on forfeiture.

When these forfeited shares are reissued at a discount, the discount amount (loss on reissue) is debited to Share Forfeiture Account.

The formula becomes:

Balance in Share Forfeiture Account = Amount forfeited (Profit) - Discount on reissue (Loss)

This balance is then transferred to Capital Reserve.

Example: 100 shares of ₹10 each, ₹8 called up. Final call of ₹2 not paid.

Amount forfeited = ₹8 - ₹2 = ₹6 per share (credited to Share Forfeiture A/c)

If reissued at ₹7 per share → Discount = ₹3 per share (debited to Share Forfeiture A/c)

Balance transferred to Capital Reserve = ₹6 - ₹3 = ₹3 per share

This is profit on forfeiture minus loss on reissue.

Correct Answer: Option 3

2025: 13 May Shift 2

Which statements are correct-

(A) A company's shares are generally transferable.

(B) Shareholders of a company are liable for the acts of the company.

(D) Paid up capital can exceed called up capital.

Choose the correct answer from the options given below:

2023: 20 June Shift 2

Determine the amount to be transferred to Capital Reserve on reissue of Rahul's Shares

2026: 13 May Shift 2

Match List-I with List-II.

List-I	List-II
(A) Subscribed but not fully paid up capital	(I) Shown under "Other Current Liabilities" in Balance Sheet
(B) Calls in Arrears	(II) Shown under "Reserves & Surplus" in Balance Sheet
(C) Calls in Advance	(III) Deducted from Subscribed Capital
(D) Securities Premium Reserve	(IV) Share Capital Note Disclosure

Choose the correct answer from the options given below:

2026: 13 May Shift 2

1,200 shares of Rs.20 each were forfeited for non-payment of Rs.4 per share on first call and Rs.10 per share on final call. Share forfeiture account will be credited with ________.

2025: 4 June Shift 2

When journal entry for forfeiture of shares is recorded in the Company's Accounts Books, the Share Capital Account -

2025: 4 June Shift 2

Discount allowed on reissue of forfeited shares should be debited to:

After forfeiture of share, the amount transferred to capital reserve is

Solution

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